A wise move for Costcutter

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Costcutter is not a sexy brand. But there’s no reason why it shouldn’t be loved. It is a major player in the ever growing convenience sector and is putting some weight behind shaking off its dreary perception.

The brand has been somewhat neglected in the past decade. It’s neither failing nor flourishing; it’s one of those brands that is just there.

It’s there when you want to pick up some milk and a loaf of bread on the way home.

It’s there when you want a paper at the weekend, but it doesn’t have a lot of brand love.

However, with the increase in convenience shopping thanks to rising fuel prices and tightening household budgets, and the multiples tripping over themselves to extend their presence in the sector, it’s high time that Costcutter put up more of a fight.

Standards have been yanked upwards as competition in the sector has increased and it is no longer a second rate segment of retailing.

Ian Bishop, the symbol group’s marketing director joined Costcutter last year tasked with dragging the chain into the modern world.

This week the chain revealed its new three-tiered brand architecture built on a thorough segmentation study that identified a lower, middle and upper tier within the convenience market.

Costcutter only had one kind of store to serve all three tiers but is now introducing a more sophisticated brand architecture to maximise its brand in all areas.

It has introduced the upmarket MyCostcutter brand, which has a dramatically different brand look, store layout and product range designed to target more affluent shoppers in specific locations and compete with M&S Simply Food and Little Waitrose.

At the other end of the scale, the group is looking to introduce a non-Costcutter branded value chain which Bishop says is designed to “protect” the core brand and help elevate perceptions of it.

This is a very clever move by Costcutter.

Symbol groups like Costcutter and Spar face a difficult operational and branding challenge. Because they are franchises run by independent store owners the overall brand is only as strong as their worst store.

Poorly managed stores can taint the perception of the overall brand and there can be a huge gap between the corporate brand strategy and how that transpires across 1,600 stores in the UK.

By removing its brand from a chunk of stores performing at the lower end of the market, Costcutter is immediately going to strengthen its core brand, while continuing to offer a product that serves that segment of the market.

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